Changes to German employment law could drive up demand for legal counsel

Given that the UK’s departure from the EU could put banks’ access to passporting rights at risk, it’s somewhat unsurprising that a number of European cities are vying for the attention of financial institutions. The strong presence of international banks in the UK creates a necessity for a significant amount of legal counsel, and should banks decide to relocate across the channel post-Brexit, there is no doubt that legal demand would surge in their new European base.

According to recent reports Germany is considering changing its employment laws to make Frankfurt a more attractive location for international banks. The German government is said to be considering a revision to the current law, capping employee protections at either €100,000 or €150,000, which would make conditions such as redundancy terms less generous.

One of the city’s main drawbacks is its labour laws, which can make redundancies both difficult and costly. Minimum statutory redundancy terms, for example, are twice as generous in Germany as in the UK, and there a range of protections for older workers and those with families. So while firing a banker making €1.5 million might only cost around €150,000 in the UK, it could amount to the equivalent of their entire salary in Germany. This is of particular concern for banks, which often hire and fire more rapidly than other sectors.

By relaxing these laws, Germany could cement Frankfurt as the destination of choice for both banks and bankers looking to relocate post-Brexit. Indeed, Germany is already home to 2,500 banks in total, more than any of the other cities vying for London jobs, and many international banks already have an established presence in Frankfurt.

There is little doubt that firms would look to relocate their headquarters to a city in which they already have a presence, rather than relocate to an entirely new location, so Frankfurt is potentially a strong contender already. There is already a demand for legal counsel amongst financial institutions in Germany, but banks would undoubtedly need significantly more guidance were they to relocate their European headquarters to the city.